6 Hidden Costs Of Government Inaction On Climate Change

Federal inaction on climate change will will lead to hundreds of billions of dollars in damages, by the federal government's own estimates. But there are less obvious costs Americans face because we lack a stable climate policy.
"We’ve talked a lot about scientific uncertainty, and I think what’s happened over the last 30 years is that our scientific uncertainty has greatly reduced, but the policy uncertainty has not," said Kelly Sims Gallagher, a professor of energy and environmental policy at The Fletcher School, Tufts University. "Certainly not in the United States."
At the start of this century, the U.S. routinely invested more in clean energy technology than China did, but U.S. investment has stalled below $60 billion a year since 2010, while Chinese investment has soared as high as $140 billion. Gallagher blames policy uncertainty.
"The Chinese had much more stable policies that created much more incentive for firms in China and investors globally to invest in clean energy in China," Gallagher explained at a workshop on deep decarbonization hosted by the National Academies of Sciences, Engineering and Medicine. "Literally being able to calculate a return on investment as a consequence of different policies in China—stable, durable, clear long-term policies made a big difference."
The U.S. government's unstable policies are costing Americans, according to Gallagher, in the following ways:
1 Stranded Assets
"We know that if we’re going to continue to delay we’re going to have continued investment in high-carbon technology and infrastructure, and that in turn leads to carbon lock-in and/or stranded assets," Gallagher said.
Stranded assets might include new natural-gas plants without carbon capture, which may have to shut down early because they can't compete with clean gas plants or renewables.
2 High Interest Rates
The Climate Policy Lab at Tufts recently analyzed interest rates paid by renewable energy developers in the U.S., China, and Germany and found that U.S. developers pay much more, Gallagher said:
"Why? Because there’s so much policy uncertainty that financial investors perceive them to be risky and are much less likely to give low interest rates."
3 Loss of Technological Leadership
When countries fall behind on development, they suffer what Gallagher called "knowledge depreciation," an erosion of expertise that could prove costly when that expertise is most needed.
4 Loss of Green Jobs
"We certainly have seen that in the solar PV and wind industries in the United States," she said. The solar industry is growing but the number of solar jobs in the U.S. has dropped since Donald Trump imposed tariffs on solar panel imports.
"I hope we don't see that in other emerging technologies like energy storage."
5 Steep Incline Ahead
"Certainly we can expect higher costs if we have to have really steep emissions reductions as a consequence of continued delay."
6 Patchwork Costs
States, cities and localities have risen to the climate challenge in the absence of federal leadership, and while local policy is better than no policy, the resulting policy patchwork can incur costs as well. "And certainly we have higher costs because of ad hoc, redundant, contradictory or fragmentary policy approaches that emerge due to at least our federal policy vacuum."
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